April declines largest ever in manufacturing, industrial production, retail sales, and housing starts
- New unemployment remain above 2 million even nine weeks into the COVID-19 crisis. Truck freight volumes continue to recover in stages.
- The rail space is a tale of two markets -carload activity is weak while intermodal has been trending back up.
- Stay up-to-date with all of the latest insights from the FTR Experts at: freight.tirintel.com/coronavirus
OverviewAbout the only good news from economic indicators covering April is that they are almost over. The past week has served up the largest-ever declines in industrial production (IP), manufacturing, retail and food service sales, and housing starts. Permits authorized for new residential construction did not suffer their worst drop ever, just their third worst. Also, March saw the second-largest increase ever in the inventories-to-sales ratio, behind only November 2008. The April ratio, however, likely will show the largest increase ever.The April milestones are especially remarkable because they all followed very sharp March declines. For example, the largest drop in retail and food service sales be-fore April 2020 was March 2020. The drop for housing starts in March was the 10th largest ever. The March declines in IP and manufacturing were not as large, relatively speaking, but that data goes back to 1919, a decade before the Great Depression. (Graphs of these data series appear on the final page of this report.)None of these indicators are surprising given a near-shutdown of U.S. goods production and consumption –except for food –in April due to the coronavirus (COVID-19) pandemic.
Most indicators should look at least ma-ginally better in May as states continue their staggered emergence from lockdown. One exception could be pay-roll jobs, which likely will be even lower in May because unemployment claims continue in large numbers and because the data will capture job employment changes only through the middle of May.The number of new unemployment claims continues to taper off, but they remain at levels that would have been unthinkable three months ago. On Thursday, the Labor Department reported that 2.4 million Americans had filed initial claims for unemployment insurance benefits on a seasonally adjusted basis for the week ended May 16. Although initial claims are now at their lowest level during the nine weeks we have seen elevated claims, they were down by only 249,000 from the prior week. Over the past nine weeks, the seasonally adjusted total number of initial claims is 38.6 million. Seasonal adjust-ments inflate the number of actual claims during this pe-riod by about 3.3 million. Approximately 25 million Americans – 17.2% of all peo-ple covered by unemployment insurance –have been receiving unemployment benefits for at least a week on a seasonally adjusted basis. The unadjusted figure is 22.9 million, which is 15.7% of all covered workers. One final economic indicator we saw this week was sales of existing homes, which dropped 17.8% in April, according to the National Association of Realtors. The annualized rate of sales is lowest since July 2010, and the percentage drop is the largest since that same month.Next week we will get just a couple of key indicators regarding April: Orders for manufactured durable goods and sales of new homes.